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Saturday, January 9, 2010

Poll: What should be the role of business ethics?

This quarter, I am taking a course entitled A Guide to Business Ethics. The course is equal parts (1) how technological change brings up unresolved ethical questions in the business environment, (2) how religion, politics, and business have evolved over the last 100 years, and (3) how should business leaders and politicians respond to the changing ethical environment.

As I am spending the day doing some reading for the course, I thought it would be an interesting poll to pose the question to you:

What role should business ethics play? And, why?

(a) Central. There is a "right" way to conduct business.(b) Central. Conducting business ethically is a profit-maximizing move.(c) Secondary. Profit-maximization and returns to shareholders are more important.(d) Non-existent. As soon as you give up your ethics, the rest is easy.

I'm interested in hearing what you have to say about this question. So, please vote early and often (on the sidebar --->). Tell your friends and CEOs to vote. I'm looking forward to seeing the response.

6 comments:

Honestly, I have very little interest in making the ethical tradeoffs that businessmen have to make. I'm not taking the course to learn how to make ethical tradeoffs.

Why then am I interested in the study of business ethics? I have three reasons.

(1) The course is taught by Robert Fogel, a fascinating guy (and Nobel Laureate). He is incredibly engaging, and I love his lectures. They're full of insight into American culture.

(2) The course is not primarily concerned with making ethical tradeoffs. So far, it has focused more on the reasons that ethical norms have changed over the last 100 years. Therefore, in my mind, the course is more of a study of how informal institutions have changed in the United States, and the mechanisms for such institutional change. That's fascinating to me.

(3) My other classes focus on positive economics without seriously considering different criteria for making normative decisions. As part of my general requirements, I chose to give myself some balance.

My primary reason is #2, but as you can see, I have plenty of reasons to take the course.

I'll start with the observation. Given the positive correlation between ethical business and material success (I haven't done/seen/looked for a systematic study), it could be that choosing the ethical path is always profitable, and no real tradeoff exists. But that's not the only explanation for your observation. I see two cynical explanations, and one more open-minded one. First, the cynical explanations:

1. Successful people are good at being ethical because they're just good at everything. Their fundamental goodness is why they're successful in the first place.

2. Businessmen who are successful are very good at hiding their ethical pitfalls while proclaiming their ethical triumphs.

Those first two explanations are -- for some reason -- unsatisfying to me. I think my third explanation seems most plausible:

3. Being ethical and being a good businessman are both very difficult tasks, which involve tradeoffs in themselves. It's not always clear to see what is ethical (just as it is not always clear to see -- ex ante -- the right business strategy). So, people who are good at figuring out the right ethical strategy in business get rewarded with material success. In short, good ethics is an element of successful business, and not everyone is successful (but that's because doing good business is a hard problem).

In my view, ethical tradeoffs are unavoidable in a world where the right ethical tenant is unclear. So, why do people *have* to make ethical tradeoffs? I think it is because what is ethical is always in flux. And, it is in flux because of rapid technological change.

In 1900, no one could have imagined that we would be flying *routinely* to get around the country, that automobiles would be a primary form of transportation, that advances medical technology would allow us to have safe and successful surgeries, or that the Internet -- in its present form -- would have been developed?

Because no one imagined these technologies, no one bothered to work out the ethical dilemmas of airport security versus privacy, global warming, abortion, and cybersecurity. Different businesses are at the forefront of each of these ethical dilemmas, and I only took a small sample of high-profile ethical dilemmas. Most businesses face the problem of doing business in a world with unresolved ethics.

I think it would be fun to go back in time and ask a person from 1900 what the appropriate number of times an employee should check his/her e-mail (and what the appropriate employer policy should be regarding e-mail). I bet we could confuse even the brightest mind in 1900, and I think the person's ethics would be just as confused.

So, to summarize, I think people in business *have* to make ethical tradeoffs because they're figuring things out... just like the rest of us.

1) Just because the right choice may be unclear at the beginning of a decision process, does not mean that there is none or that it is impossible to know.

2) I think a focus on "norms" as opposed to a focus on "attitudes" - similar to the nominative "virtues" in the sense of "dynamic power for the good" - is that which makes it more difficult to find the ethically good or right. Focusing upon the number of e-mails one views as opposed to the attitude of a responsible worker who is truly seeking the good of the enterprise enters into a very "third-person" idea of ethics, in which someone judges me from outside. An approach which takes into account the adult nature of the person, instead of being paternalistic, is the "first-person" idea: although there may be norms to guide me, I am aware of the good I am seeking instead of looking to see how far I can lean off the cliff before I fall.

This also manages to transcend the difficulty of "progress", because the person with the right "attitudes" or "virtues" is capable of knowing or doing the good in changing situations, whether he did it yesterday, does it today, or will be doing it ten years from now.